Shares rose for a second day yesterday as political turmoil eased somewhat. The benchmark TAIEX advanced 48.71 points, or 0.75 percent, to 6,572.39.
Market sentiment improved as a recall motion against President Chen Shui-bian (陳水扁) failed.
That development prompted the index to surge to a mid-session high of 6,621 points, before retreating to the 6,572.39 level.
While major institutional investors bought a net NT$3.323 billion (US$101.8 million) of Taiwanese stocks yesterday, market turnover remained light at NT$89.482 billion, according to Taiwan Stock Exchange statistics.
"Investors stopped short of pushing the upside too far due to lingering uncertainty over the Fed's stance on interest rates," AFP quoted Wilson Lien, deputy manager at Jih Sun Securities Investment (日盛投顧) as saying yesterday.
New high predicted
The local bourse is expected to see a new high in the fourth quarter, driven by strong demand in the Christmas shopping season, HSBC Investments (Taiwan) Ltd said in a report yesterday.
"There is no reason to be pessimistic about the local stock market, judging by the steady economic performance and local companies' increasing earnings," Huang Shih-chia (
"We expect the index to reach a new high by the year-end," he said.
Investors have been concerned by the recent performance of the nation's stock market, which has been affected by domestic political problems and declines in international markets.
The benchmark TAIEX tumbled by over 16 percent from a high of 7,476 points on May 9 to a low of 6,268 points on June 9.
Foreign investors remitted US$77 million last month, and the figure increased to US$1.9 billion in the first half of this month, the report said, citing Financial Supervisory Commission statistics.
But selling by foreign investors has eased, pushing the TAIEX up by 2.95 percent last Thursday, the report said.
In view of the domestic political climate, surging oil prices and possible hikes in interest rates, the local bourse will continue to fluctuate in the third quarter, until the end of August, when companies publish their financial reports, Huang said in the report.
Demand
With strong demand expected in the Christmas and back-to-school seasons, local companies' profits are expected to increase by 25.4 percent from last year, surpassing Chinese and Indian increases of 12.6 percent and 19.2 percent respectively, Huang said, citing figures from the Institutional Brokers' Estimate System statistics released last month.
The earnings, as well as the low price/book value ratio and price/earnings ratio, make Taiwanese stocks attractive, Huang said, adding that it was a good time to deploy for middle or long-term investment.
RSS